In Probability of Injury (x-axis) versus Wage (y-axis) space, isoprofit curves slope upward because
A)profits increase with the number of workers the firm employs.
B)workers are willing to accept a lower wage in exchange for a riskier work environment.
C)the firm does not like to pay higher wages.
D)in order to keep profits constant, a higher wage must be offset by the firm saving money by not investing as much in preventing on-the-job injuries.
E)profits are constant with respect to risk.

Question

Quizplus · Accepted Answer

Isoprofit curves are curves of constant profit. If a higher wage is paid to the workers, the firm will have to spend more on preventing on-the-job injuries to keep the probability of injury constant. Therefore, the isoprofit curve will slope upward because a higher wage would have to be offset by saving money in preventing on-the-job injuries to keep the profit constant.

In Probability of Injury (X-Axis) Versus Wage (Y-Axis) Space, Isoprofit